Hello RawRaw,
The companies who use Kickfurther cross a spectrum. Some are doing less than 100k in revenue annually and have existed for 1 year, others are doing over 5 million or have existed for over 10. All of them were operating and financing their business in some way before they acquire funds from the Kickfurther platform. Many are financing PO's for established retailers. They have access to other forms of financing whether it's personal, institutional, or from investors. Some have bank loans, revolving door working capital loans with services like paypal/Amex, MCA histories, factoring relationships, etc, but they still find Kickfurther compelling for three reasons.
1.)
Having access to financing doesn't mean having the amount you need, at the time you need it, to meet obligations and take advantage of growth opportunities. This is especially true for growing companies whose financing is capped by the sales figures of previous years. Kickfurther targets companies who can meet their existing cash flow needs, but who can use the additional cash flow to invest in growth.
2.) A significant portion of our companies are unbankable due solely to how young their business is regardless of their financials and other evidence of success and credibility
3.) Companies who do not need funding at all will use Kickfurther as a marketing play. Given that they have financing cost anyway, Kickfurther allows them exposure to thousands of users with disposable income.
It allows them to engage very personally with hundreds of backers who derive a financial benefit on a monthly basis from working with their brand. They can communicate with these backers directly, offer discounts, and the backers are incentivized/prompted to share about the brands on social media when they receive paybacks. In addition any user on Kickfurther can actually stock inventory for the brands they back and originate sales to their personal network - Here is my store
http://kickfurther.com/store/estraubAn offer of 5-10k of inventory at 10% in 6 months would bear a cost to the business of 695-1390. That is an extremely sustainable marketing cost to derive the sort of deep engagement that comes when backers partner with your company on Kickfurther
Here are a few other Marketing initiatives we are running currently to support our brands:
http://info.kickfurther.com/kickfurther-holiday-storehttp://info.kickfurther.com/kickfurther-new-years-contests4.) The final factor is simply experience. If you had a choice between paying your hard earned margin to a lender who takes their vig and turns their back or to a group of supportive "cheerleaders"' who celebrate your business victories and mourn your struggles which would you prefer?
As to your question of collateral and the advance rate. Users are not making an asset backed loan. You would LITERALLY be purchasing the inventory at 100% of cost pricing and simultaneously placing it with a business owner that has a history of selling at a margin on consignment. You have some idea of this margin by looking at a figure we call the "PSR".
If the business owner fails to sell within the projected timeline the users can vote to cancel the contract and Kickfurther will provide options to backers to attempt to re-sell or liquidate the inventory. This blog post by our CEO details the process in this case -
http://info.kickfurther.com/our-cancellation-process-in-a-nutshellWe currently have 2 active cancellations
1.) Covers about 300 unsold wireless bluetooth headphones
2.) Approximately 9 unsold Les Gibson Brand guitars
Now I'm being totally upfront when I say this model has to be proved out, but consider this.
These items were being previously sold at 100-500% markups, if we can liquidate them at even a 30% mark up on cost there is the opportunity that cancelled offers could be even more profitable than successful ones.
What I can say for certain is that my CEO's background is in retail inventory sourcing and merchandising.
I can also tell you that our Operational advisor is John Donovan who was the original COO of Lending Club.
We are committed to providing a uniquely compelling mix of financing and marketing benefits that will attract solid companies to use the platform responsibly. We are equally committed to doing what we can to defend our community's interests when bringing on brands and when pursuing options in the event of a cancellation.
Here are a list of brands that have funded purchase order backed goods on Kickfurther
http://kickfurther.com/offer/filling-large-purchase-orders-for-the-holidayshttp://kickfurther.com/offer/sodo-apparel-rei-pohttp://kickfurther.com/offer/help-motion-sound-get-in-motionhttp://kickfurther.com/offer/ready-set-go-holiday-2015http://kickfurther.com/offer/titin-tech-sept2015http://kickfurther.com/offer/mirage-pet-products-amazon-expansionMany more are very credible and backed by a mixture of wholesale orders or a history of strong online sales and wholesale orders. I'm not trying to paint an overly rosy picture, but what you can see for certain is that as we've been able to fund larger amounts of inventory we are recruiting significantly more established brands with significant number of offers by brands that are on their second Kickfurther offer so they have a visible history of performance on our platform.
Example:
http://kickfurther.com/offer/vitajuwel-and-village-rocksYou have every right to be skeptical, all I ask is that you take a look, keep an eye on progress and if curiosity takes you this link will give you $10 free and you can back a brand for as little as $20
http://kickfurther.com/dswIf you've read this far, I'm very appreciative of your interest. We value knowledgeable feedback very highly!
Best,
Erik
In the case of our first two cancellations they involve
1.) About 300 Wireless bluetooth
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